DXY was thumped last night as EUR surges:
But it couldn’t touch the Australian dollar which went mad:
Not so much against EMs:
Gold launched as well:
And oil:
Dirt a little:
Miners were soft:
EMs stocks gapped:
Junk too:
Bonds are stone dead:
Stocks were mixed:
The only chart that matters took off again thanks to a spectacularly inept Phil Lowe. Unbelievably, the last time this index threatened to break down in early June the RBA boosted as well:
It is beyond my words to convey how stupid this is. Most assuredly, last night’s forex action was in part driven by this:
EU leaders have struck a deal on a landmark coronavirus recovery package that will involve the European Commission undertaking massive borrowing on the capital markets for the first time.
After days of sometimes bitter debate, the bloc’s heads of government agreed on a €750bn package aimed at funding post-pandemic relief efforts across the EU. The deal was announced in a tweet from Charles Michel, the European Council president, at 05.31am (CET) on Tuesday and was hailed by Emmanuel Macron, the French president, as a “historic day for Europe”.
The recovery fund centres on a €390bn programme of grants to economically weakened member states — a significantly smaller sum than the €500bn package originally proposed by Berlin and Paris in May. Leaders also signed off on the EU’s next seven-year budget, which will be worth €1.074tn.
The deal is decent if not earth-shattering at 4% of GDP over years but it’s the symbolism that matters. The Euro is safe for now so is bid as its better virus performance comes to bear:
Even so, EUR only rose 0.74 versus DXY whereas the AUD did double that. Why? Because a staggeringly stupid RBA threw its hands up yesterday on any and all monetary policy innovation, removing all blocks to a higher Australian dollar.
So long as the fakeflation now runs, and DXY keeps falling, commodity prices will rise and the RBA has guaranteed every forex speculator in the world that it will do whatever it takes to support their deflationary bid under the AUD.
